A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

Has anyone analyzed whether these upticks in listings are, in part or in whole, a seasonal effect? ie this is the slow season in real estate sales?

I am a housing bubble believer, but I sometimes worry that we bloggers and readers sometimes get wrapped in our own bubble. I read the main blogs religiously; but I wonder whether we are simply reinforcing our own beliefs... sort of like the right wingers who read Ann Coulter, listen to Rush Limbaugh, and watch Fox News until they lose touch with reality. In that spirit, can anyone recommend an anti-bubble blog that presents the other side of the argument in an intelligent way?

Washington, DC - An online calculator that enables users to compare the cost of owning a home vs. renting was released today by the Center for Economic and Policy Research (CEPR). The Housing Cost Calculator takes into account the unprecedented rise in house prices since 1997, as well as current house and rental costs for 378 metropolitan areas.

The calculator provides potential homeowners with an easy way to calculate how much a new home will cost them over time. It compares the amount of additional cash available to a renter with the amount available to a homebuyer who sells a home at a specified time in the future. Users simply punch in data such as house price, region, down payment, mortgage rate, tax bracket, and year they expect to resell the house.

In the last eight years, there has been a record increase in house prices, with prices rising by more than 45 percent after adjusting for inflation. By contrast, rents have risen only slightly more than the rate of inflation over this period. This run-up in home prices has led to record construction levels, which in turn have led to record rental vacancy rates, depressing rents. The over-supply of housing will continue until prices eventually adjust. People who buy a home at a bubble-inflated price -- and then see the price plummet in the crash -- may lose much or all of their savings. CEPR's calculator will allow potential homebuyers to evaluate the cost of homeownership, assuming that house prices eventually return to their long-term trend path.

Looked at a rowhouse development this weekend a block from where I live. It overlooks Graceland Cemetery on Clark Street in Chicago. 4 Storeys, 4 bedrooms, granite kitchen, 3.5 baths (two of them granite), 2 family rooms, dining room, garage, patio overlooking the cemetery. The cops hang out at the White Hen all the time nearby, so it's pretty safe. The kind of place to raise 3 kids.

One million dollars.That's 18 times my salary. The rowhouse two doors down is next to the gas station and it is 100 sq ft smaller, so it's 100K less. Still, 16 times my salary. If my live-in girlfriend can find a decent job, the cheaper one is still 10.5 times our combined salary.

I pay 1250 a month in a spacious 2+ bedroom apartment, in a century-old (but classy) two-storey greystone. That's 36% of my monthly income AFTER TAXES.

(if you have trouble following the link, just go to signonsandiego - it's the headline.

Anyway, the short of it is that san diego median resale housing prices fell $15K last month, which is the biggest drop in the 18 years they've kept records.

Housing prices are still up 5% over last year, however (which is also the lowest since records began in 1988).

Also mentioned - local housing "experts" are still forecasting a gain next year. Not sure what an expert is - would they include a re agent or mortgate broker?

In other news (from the SF Chronicle), housing prices have dropped considerably in Honolulu - median price was "$418,000 -- well below a peak of $569,000 in August and 8 percent below the year-ago median".

Hey Anonymous; good read on the San Diego Housing Bubble.I believe it has burst there allready.I searched in my old neighborhood of 92057 after reading the article I saw 16 listings for sale just in my old subdivision one in particular stood out because this same agent offered me a low ball offer when I was selling mine for 50K under list of course I laughed because she bragged about how she bought several houses to flip here's one of her listings she bought last summer and I saw 5 of these identical homes selling for 405K from the same realtor who owns them too but Amalla of Independence Realty is asking 475K-480K here's the listinghttp://sdhomesearch.signonsandiego.com/sales/Listing.asp?lid=2074-051083125s.cfm?RequestTimeout=5000

I also found this link so people can actually see these ridiculous recorded prices which I found another house Amalla bought for 530K also last summer. You can view listings sold by month and year...enjoy! http://www.sddt.com/databases/HomeSales/Result

43% of first-time home buyers put no money down If prices fall, economic damage could snowball By Noelle KnoxUSA TODAY

WASHINGTON — As housing prices soared last year, an eye-popping 43% of first-time home buyers purchased their homes with no-money-down loans, according to a study released Tuesday by the National Association of Realtors.

The trend is potentially ominous. The real estate market is cooling in some areas, and rates on adjustable-rate loans are creeping up. As a result, some no-money-down buyers could owe more than their homes are worth.

The median first-time home buyer scraped together a down payment of only 2% on a $150,000 home in 2005, the NAR found.

Already, home prices in many areas are declining, and the “For Sale” signs are hanging in front yards longer. There's now at least a 50% risk that prices will decline within two years in 11 major metro areas, including San Diego; Boston; Long Island, N.Y.; Los Angeles; and San Francisco, according to PMI Mortgage Insurance's latest U.S. Market Risk Index.

“In a number of areas, particularly on the coasts, they have a high risk of price declines in the next two years,” says Mark Milner, chief risk officer of PMI.

Red-hot home building, acquisitions, remodeling and refinancing in recent years helped drive the economy and raise fears of a real estate bubble. Dean Baker of the Center for Economic and Policy Research says that if housing prices fall at least 10%, it could be even more damaging than the collapse of the high-tech stock bubble in 2000.

“If we do get a spike in mortgage rates, and a modest decline (in the housing market) turns into a rout, there's almost no bottom to that,” Baker says. “That's a crash scenario.”

Baker and other economists are concerned that many lenders have pushed a series of creative but potentially dangerous loans to help more Americans afford a home. The traditional 30-year loan with a fixed rate remains the most popular way of financing, according to the Mortgage Bankers Association. But about one-third of homeowners take out riskier loans, such as interest-only or flat-minimum-payment mortgages.

Grinch34That was the worst job of spinning by the NAR President I've ever seen. It's 43% for the love of God!!!! I knew the pop was coming..I just had no idea how loud the explosion was going to be. These people are going to get slaughtered

Grinch34:These people remind me of a buddy mine 5 years ago. He called me asking me for some investment advise (I'm not a financial Planner) so I told him what I was currently doing...and how much money I allocated for risky investments. My buddy, who doesn't know what a Mutual Fund is, wanted to start trading commodities with 100% of his assests (LOL)

No Money down loans are fine in the right circumstances...but if 43% of the people took out these type of loans in 2005, they will soon get crushed....

People will start pointing fingers of blame at lenders, Politicians....When they should just look in the mirror.

Simple rule in life...If you're responsible for the payment....then you are responsible for knowing what the hell your getting in to. This isn't 1930..It takes 5 seconds to google something and get your answer.

Some people believe the real estate and mortgage bubbles were part of another "Grand Conspiracy" cooked up by Greenspan and the White House. The motive: To cause the housing market to crash in the Blue States. Ripple effects would trash the local economies of states where the Democratic Party reigns supreme.

There is an uptick in sales in my area. The data shows that from October through December average houses sold in 91762 zip cod 13, the first 2 weeks of the year resulted in 30 or double the average sale from the previous 2 months. I am not sure who are stupid to buy a condo for 300K+ in an area where the same condo sold for 45K in 1999. Go figure. I am renting the same condo for $1200 / month.

New York City Mayor Michael Bloomberg on Friday said the real estate market was slowing "dramatically" and only a "miracle" could stop soaring mortgage rates from eating into housing prices.

Consumers are definitely feeling the pinch of higher mortgage lending rates and are not quite as eager to snap up a new home especially at time when house prices in the Big Apple are near record-highs, the Republican mayor said in his weekly radio show.

"The real estate market is slowing down dramatically and we're going to have a problem down the road," Bloomberg said.

"If people who want to sell their houses have to wait a longer time before someone comes along and buys it, it would be a miracle if prices didn't start to go down," he said.

I was wondering where all the money was going to come from. Bush has been borrowing and spending like an insane animal for several years, yet he refuses to raise taxes on his campaign contributors.

The money to pay for Republican excesses has to come from somewhere, and if it's not taxes, it will be extracted from the population by some other means.

It's just like after the horrendously expensive Vietnam war - much of the money to pay for it was taken from the population via inflation during the late 1970's. However, some people - those who bought houses with low down payment in the early 1970's - made out like bandits.

So this time the housing bubble could well be the wealth-extraction method. Many millions of people are likely to lose not only their houses, but all their savings, plus the fruits of their labors for the next ten or twenty years.

I repeat, without taxes, that money will have to come from somewhere. If you haven't been giving the right campaign contributions, it's going to come from YOU.

I am here near the ski slopes of South Lake Tahoe. I was told by a realtor that a house which recieved an offer of 679k in the summer but was not sold at the time due to "owner pride" was sold for 550 in the end of last year. That's a huge drop. Realtor said the market is not moving, no paychecks for many realtors for months.

Anon, local housing price drops were inevitable, given the base closings.

Yet these were relatively isolated, and despite the localized (and hopefully temporary) hardship that caused, base closings were good for the economy, because it freed up money that could be used for other purposes.

In the 1970's, many people's savings were in effect partially confiscated by inflation.

(My opinion is that this was done to pay for the Vietnam War. It's more palatable for politicians, especially conservatives, to pick the pockets of citizens indirectly than to tax corporate campaign contributors directly. That corporations were the only beneficiaries of that war is irrelevant.)

This affected everyone with fixed dollar denominated assets, like savings accounts. It also hurt working people, whose wages almost never keep pace with inflation.

In the current case, I expect that money will be extracted from those who bought houses in the last few years, when the value of those houses drops below their purchase price, and in many cases, below the amount of the mortgage. When people default, the mortgage companies will come after their savings (assuming they still have any after buying an overpriced house). And the new bankruptcy law will help them do it.

Hey, maybe I'm wrong. Making accurate predictions is always difficult, especially about the future. ;-) But that's how it looks to me.

I'm a housing newbie, so could someone please explain to me something I keep reading about here? Sorry about the dumb ass question: What exactly does it mean when someone has cashed out the equity in their house (to buy a car, vacation, whatever)? Does that mean they're getting a home equity loan? I can't believe it's just free cash, so that's probably not it either.

"cashing out the equity" is a euphemism put forth by the lending industry to lead people to believe that by taking on a second mortgage they are somehow like a player who is winning in blackjack and just took chips off the table.

While taking a "second mortgage" implies what someone in a dire financial situation would do, "cashing out the equity" implies that the person is somehow claiming their winnings. Its amazing what words can do.

Robert Kiyosaki Calling for a Real Estate Bust...Now I've seen everything!!!!!

Smart Investing Amidst Real Estate Mania

In early summer of 2005, I sent a warning to the Rich Dad community that the real estate market was cooling down. After all, we know that all booms go bust eventually, and every party comes to an end.

While many readers thanked me for the words of caution, many others sent me hate mail. An angry real estate broker called me and said, "Are you trying to ruin my business?"

The angry readers should draw insight from something Warren Buffett said: "For some reason, people take their cues from price action rather than from values. What doesn't work is when you start doing things that you don't understand or because they worked last week for someone else."

The sage of Omaha sums up pithily: "The dumbest reason in the world to buy a stock is because it's going up."

Personally, I would say, "The dumbest reason to buy anything is because the price is going up." Yet that's what people do when they invest. They generally don't buy high-priced things when they shop.

Fools Rush In

For example, if Safeway had a sale -- 25% off everything in the store -- the supermarket would be swamped. Yet, when the stock market or real estate market has big discounts (often called a crash or a burst bubble), that same shopper runs away from an asset sale. Instead, they wait until prices are high and other fools are bidding them up further to finally buy.

I estimate that 90% of all investors invest for price movement, not value. If prices begin to escalate, as they did in real estate from 2000 to 2004, amateurs turn pro and begin buying real estate to flip -- for example, buying a home for $200,000 and then selling it for $250,000 a few months later.

Most stock market investors do the same thing. In investor language, flipping is known as "the greater fool theory of investing" -- you're buying something not to own, but in the hope of selling it to someone who's a greater fool than you.

The Coming CrashWe all know a real estate crash coming. The problem is we don't know when.

One of the more popular predictions floating around is that investors are now moving out of real estate and back into the stock market. Another prediction, which I think is valid, is that the real estate market is set to crash because of the high costs of building materials.

But such rumors only affect those investors who, as Buffett says, "take their cues from price action rather than from values." During such periods of high prices and volatility, it's even more important to pay attention to value, more than price.

Yet, it's one of the toughest things to do -- stop and focus on value -- especially when prices are volatile in either direction. It's difficult to resist the urge to sell when prices are dropping and buy when they're rising.

The Best Time to Buy

Take market crashes. I love them because that's the best time to buy -- finding true value is a lot easier during such periods. And since so many people are selling, they're more willing to negotiate and make you a better deal.

Although a crash is the best time to buy, the market's high pessimism also makes it a tough time to do so. I remember buying gold at $275 an ounce in the late 1990s. Although I knew it was a great value at that price, the so-called experts were calling gold a "dog" and advised that everyone should be in high-tech and dot-com stocks. Today, with gold above $500 an ounce, those same experts are now recommending gold as a percentage of a well-diversified portfolio. Talk about expensive advice.

My point is that this current period is a tough time to buy or sell. Real estate is high, interest rates are still relatively low, the stock market is rising, the U.S. dollar is low, gold is high, oil and gas are high, and there's a lot of money looking for a home.

So the lesson is: Now, more than ever, it's important to focus on value, not price. When prices are low, finding value is easy. When prices are high, value is a lot harder to find -- which means you need to be smarter, more cautious, and resist your knee-jerk reactions.

A final word from Warren Buffett: "It's only when the tide goes out that you learn who's been swimming naked." In my opinion, there are many naked swimmers, especially in the real estate market.

Gold is an even better investment than real estate now, because it still has a lot of upside to it. Once the "real estate only goes up" crowd learns otherwise, and starts to chase gold as the next "can't miss" investment, it's time to sell your gold at a handsome profit and find something else - whatever happens to be the asset that has fallen farthest out of favor.

Investing is so easy - just let the idiots looking to get rich quick inflate the bubbles for you then exit and leave them holding the bag. I moved from gold to Japanese stocks in 1979, from Japanese stocks to tech stocks in 1989, from tech stocks to gold and real estate in 1999, and liquidated my real estate holdings in 2005, and am currently in gold and cash. I missed the absolute tops each time, but only by mere weeks or months. The key is to recognize when a true bubble has formed. When the bartenders and maids are interested in getting rich easily in something you are invested in, it is a bubble and time to exit that asset class. Real estate, in many parts of the country, is now a bubble.

Posted Wednesday, Jan. 25, 2006Now that several high rollers in the Las Vegas condo-hotel game, including luxury properties linked to Michael Jordan and Ivana Trump, are either folding or selling their holdings, a growing number of players are losing their taste for big bets on high-rise, residential real estate development.

Over the past two years, as high-rise fever spread across town, prices for the luxury apartments ballooned, fetching as much as $500 - $1,000 a square foot— or up to $1.5 million for a one-bedroom— at the peak. Buyers, mostly interested in flipping them for quick profits, eagerly anted up five-figure down payments, while developers planned more than 70 luxury towers holding a total of about 43,000 units on or near the Strip and downtown. But the intense competition for the city's limited supply of contractors sent construction costs skyrocketing 30% last year, just as lending policies tightened, interest rates climbed and sales started to slow.

Currently, just 18 projects are underway, and nervous developers have called off three high-profile projects over the past seven months. A number of others, including one backed by a group including George Clooney, either are being revised or postponed. Experts now forecast that only a quarter to a half of the seven dozen originally proposed projects will ever be built. Brian Gordon, a principal at Applied Analysis, a real estate research firm, says the developers with experience building luxury high rises, whose properties are located on or near the Strip and which carry a strong and recognizable brand name— such as Donald Trump, Hard Rock and MGM Grand— are the ones playing winning hands in Vegas now.

Back east, the luxury condo markets that have had similarly explosive growth in Miami and New York, where high-end apartments can command from $2,000 to $4,000 a square foot, haven’t slumped yet. Still, experts say the abrupt reversal of fortune in the desert, where the mainstream residential real estate and hotel markets are still quite healthy, shows just how quickly the odds can change in even the most affluent markets if runaway speculation and overzealous development take hold. “It’s another case of irrational exuberance,” says John Restrepo, head of a Las Vegas real estate and economic consulting firm. “There is a market for high-rise condo hotels here; but it’s not as deep as people thought it was. The days of the two guys from the East Coast or Canada coming into town and promoting a condo development with a website and a dream are over.”

Who Would Jesus Mislead? Christian Mortgage USARates are at a 45 month low? Refi now and cash out equity they sayhttp://www.christianmortgageusa.com/?affil=3495-google5The biggest group of sheaple will fall for this one. bah bah bah

""Here is a good article from MSN - http://moneycentral.msn.com/content/Experts/jim_jubak.asp?msn"

Interesting article. However, I disagree with at least one thing. What happens in the midwest does effect other areas of the country in the housing industry. A lot of people from the midwest have either moved, retired or bought houses in the West and the South. If jobs and retirements of the Midwest are either cut or eliminated, this eliminates the ability of people from this area to buy a house (you can't move to a new area with no money). In addition price increases in the West and the South have skyrocketed so much that even if the Midwest people did not lose their jobs/retirements that they (most)would be unable to purchase a house in the West or South.

I think this situation is out of control (due to greed). It is starting out slow and will snowball and accelerate. This situation is a lot worse than what they will report. This reporting does make sense since people (media) do not want to start a Housing Panic.

Many lenders have been pushing adjustable-rate loans as a way for borrowers to keep their monthly payments down, stretch their budgets to afford a bigger house and use their home equity to get cash. Now, with short-term interest rates having moved up much faster than long-term rates, lenders are rediscovering the marketing appeal of fixed-rate mortgages. Currently, a 30-year-fixed rate loan carries a 6.27% rate, according to HSH Associates, while a one-year ARM, which adjusts annually, has a 5.39% rate.

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To all you renters hoping for a crash so you can afford to buy a home: You are being shortsighted. When a crash comes there will be lots of layoffs, first in the real estate industry with agents, appraisers, mortgage lenders, construction workers, etc. Then it will spread to Home Depot or your local hardware or appliance store. At some point all those newly unemployed people will stop buying whatever it is your employer sells, and you will be forced to join their ranks. So, unless you have plenty of cash and don't need an income to buy your dream home, then you, too, will be SOL no matter how far prices fall. Be careful what you wish for. You just might get it.

Unfortunately you are probably right. This situation is out of control. However, you failed to mention that the people who are responsible for this mess are the greedy people (by way of their actions). People who are now frustrated (renters hoping/wishing prices to come down to reasonable levels)were not responsible for this mess.

Are you are making the ass-umption that all renters work in the retail business? When the market crashes those that will be immidiately affected are:1) Folks in the industry2) Idiots who bought at the peak3) Idiots w/exotic loans terms (IO,NegAm,Pick your payment)

grinch34 - no, the renters did not create the bubble. Anyone who overpaid for a house did. Many were greedy and some were not. Some were simply desperate to get into a house and overextended themselves in order to do so.

Anonymous - Of course I don't ass-ume all renters work in retail. However, all employers are funded somehow, even nonprofits and researchers working on grants. Those funding sources dry up, too. Whatever an employer does to get funded is what it has to "sell."

"Has anyone analyzed whether these upticks in listings are, in part or in whole, a seasonal effect? ie this is the slow season in real estate sales?

"I am a housing bubble believer, but I sometimes worry that we bloggers and readers sometimes get wrapped in our own bubble. I read the main blogs religiously; but I wonder whether we are simply reinforcing our own beliefs... sort of like the right wingers who read Ann Coulter, listen to Rush Limbaugh, and watch Fox News until they lose touch with reality. In that spirit, can anyone recommend an anti-bubble blog that presents the other side of the argument in an intelligent way?"

Don't leave out left-wingers, who do EXACTLY THE SAME THING with liberal writers and broadcasters, reinforcing their own beliefs till THEY too, have lost touch with reality. To observers in the center, both sides seem equally batty and blind to the fact that you cannot have a right wing without a left wing, and vice versa.

Go to theburstingbubble.com to find arguments and posts in opposition to the bubble. Most people don't understand the metaphysical notion that we literally create what we believe, and that if enough people believe in a coming depression, it will come. This theory, which makes everyone 100 percent responsible for everything good and bad in his experience, offends a lot of people who want to be victims, and who choose to believe they are pitted against some great, unseen enemy.

That being said, the real estate bubble IS ridiculous, and impossible to sustain because it has run out of investors. Think of it as a pyramid scheme, with all of the players selling and re-selling to each other. Without a constant in-flow of new players, the game becomes boring, and everybody quits.

Thanks for responding to my original post -- I was beginning to think no one would bite. I think we're in for a long downward glidepath, perhaps seeing a 10% decline nationwide per year and hitting bottom in 2009 or 2010. In the meantime, with rents still at historic lows versus cost of buying, the smart money will be to rent for 3 yrs. Unfortunately, there are other reasons not to rent, i.e., you can't remodel.

On the other hand, and this is the piece of the puzzle that still troubles me, it certainly seems like there are a lot of buyers sitting on the sidelines. Particualry in the hottest markets like SF Bay area, NY, LA. All of that latent demand will have to be satisfied on the way down. Or will supply overwhelm demand?

How amazing can it be that one word can truly get you excited when Emeril Lagassi says that word BAM! Is it not amazing how he says it can really get you interested and excited in what he's making on his cooking show or what? I tell you. And the other thing is he really makes cooking whatever he does look easy and like I could do the same. I truly like him.This automation thing on the web is wonderful. Who would have thunk that I would be telling robots to send people mail when I want them to. This is beyond my belief structure that I though I would encounter when I came across the world wide web just a few years ago. Best mortgage in the uk

From housepricecrash.co.uk:Did U.K. property rise by 4.6% over a year or fall by 2% in the last 3 months (an annual drop of 8%). Depends on which damn lies and statistics you believe:

BBC NEWS | Business | House prices 'fell in late 2005' House prices in England and Wales fell by 2% in the last three months of 2005, according to authoritative figures from the Land Registry.posted by Webmaster @ 8:57 AM 6 comments

IFAonline: House prices up 4.6% says Land Registry The Land Registry's latest residential property price report shows average house prices in England and Wales rose 4.6% during the period October - December 2005.posted by Webmaster @ 8:56 AM 2 comments

But this is my favorite recent news item from the U.K.:http://money.guardian.co.uk/property/movinghome/story/0,,1705270,00.html?gusrc=rss

Anthony Kerrigan, a regional chairman of the NAEA who works as an agent in Yorkshire, said he had seen examples of ruthlessly professional gazundering.

"I've seen professional buyers make offers on two properties with the intention of buying the one that achieves the most significant reduction," he said.

Mark Cuban, the owner of the Dallas Mavericks, recently posted an article in his blog in which he stated that the best thing to invest in is yourself. It's old advice and it's the best investment advice there is.

I suggest that since you are now located in London, that you take photos of Islamic crazies demonstrating in the streets next weeked. Over 100,000 are reported to be 'outraged' over cartoons that depict Mohammad as a mad bomber. Apparently, truth is no defense when Mohammad is outed as a terrorist supporter.

As Iran and Syria stir up more Islamic unrest, the oil producers of OPEC are being pressured to raise prices. Already, Iran and Russia are quietly urging OPEC to adopt the Euro as the official currency for oil purghases. If Petro Euros get the nod over Petro Dollars, the housing bubble will burst rapidly because U.S. treasuries will suddenly become unpopular.

China has to put its excess cash somewhere. They apparently decided late year to forego purchasing U.S. treasuries. Hence, creating more exteral pressure on the Fed to raise interest rates.

My hometown of San Francisco has a narrow lead at 22%... LA is the next closest, at 18%. I can see why - prices are incredibly high in these two cities.

But I'm a little surprised they didn't offer up a condo hell like vegas or pheonix. Prices never got quite as out of hand as they did in SF, but there has been more new construction. To me, that's the big question - what's more dangerous - SF's sky-high prices, or Pheonix's sky-high inventories?

Bloomberg Columnists argues that European Central Bank (ECB) should allow the property bubble to continue in some countries in order to prop up deflating property markets in other areas:http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_lynn&sid=ahOhGt1W_T2c

The Thinker make a comment which I agree with. This person said that we do not have much to comment on right now until spring when the real numbers come out. Although the the recent post lately have been very interesting and thought provoking, the topics are going all over the place. Anyways I thought I would throw that out there.

So, is it black, white or grey? Do we lump everyone into the same category or are we diverse? Are some desperate in good times while others prosper in bad? Does the economy hinge on mass perception of rational exuberance or irrational pessimisms? Are there nice people in Iran? Were there nice people in Hiroshima or Nagasaki? People just like you and me? Or are they all a bunch of shotgun toting good ole boys? Do they shoot little birds and their hunting companions because they have too much free time. How much free time would you give yourself in the present condition of the country if you were responsible for the security and well being of 295,734,134 people? Actions speak volumes over words. How can I respect someone’s decisions affecting the lives of 295,734,134 people who can’t even manage a shotgun in a secure area?

Hey I've been tracking some properties in Spokane, WA (my husband and I may move there) and we're waiting to see what direction the market is going there. One of the poperties I was looking at was just "Released" and or "Off Market." Can anyone tell me that that means? Does it mean the property sold? Or that it was on sale for so long the owners gave up. The MLS number was 25021523, and before anyone yells at me we have no intention of buying a 1.2 million dollar home. I just wanted to see what it would sell for. Spoakne doesn't seem like a place that can support that many high end sales, but I see many million+ properties.

CNN is not sure if or if there isn't a bubble:http://money.cnn.com/2006/02/16/news/economy/housingstarts/index.htm?section=cnn_topstoriesAt least there is mention that there are "signs of cooling".

Housing surge could be a lot of hot airWarm weather inflates reported number of housing starts in January, but economists still expect the market to cool.By Chris Isidore, CNNMoney.com senior writerFebruary 16, 2006: 1:00 PM EST

NEW YORK (CNNMoney.com) - Unusually warm weather led to a spike in home building in January, but most experts still believe the real estate market will cool off later this year.

Housing starts jumped 14.5 percent to an annual rate of 2.28 million last month, the highest since March 1973, the Census Bureau reported. Economists surveyed by Briefing.com forecast that housing starts would come in at an annual rate of 2.02 million in the month.

But part of the jump came from seasonal adjustments, since government number crunchers usually assume cold weather in January. Instead, the month was the warmest January on record in the United States, which prompted many builders to start work unexpectedly early.

"The weather basically gave the builders an opportunity to move things forward. No one changed their plans," said David Seiders, chief economist for the National Association of Home Builders. "But I'll probably change my forecasts for the next two months lower, even if I keep the first quarter forecast at pretty much the same level."

Taking out seasonal adjustments, the raw number of housing starts rose 11 percent last month, making it the best January for housing starts on record since the bureau started keeping records in 1959.

Still, there have been numerous signs recently that the real estate market is cooling, and most housing economists expect both home sales and residential construction to slip from the record levels reached in 2005.

"When one looks at the Mortgage Bankers Association data that reveal that applications for the purchases of new homes are down 7.5 percent on a year-over-year basis, it is not hard to see that the gain reported this month is not a sustainable trend," said Anthony Chan, chief economist for JPMorgan Private Client Services.

Federal Reserve Chairman Ben Bernanke said in Congressional testimony Wednesday that a slowing housing market was one of the risks to economic growth, although he expected a gradual slowdown, and for the market to remain robust even as it slows.Good ... for January

Despite the strong "headline" number, economists said Thursday's did little to change their outlook for the full year.

"It's a very good number for January," said Phillip Neuhart, economist for Wachovia. "But should we get carried away with the seasonally adjusted number? No. We still expect a slowdown in 2006, no question about it."

Still, the report also shows some strength that can't be explained away by the weather.

Statistics from the South, which accounts for nearly half of new home construction in the country, and where weather and seasonal adjustments are less of an issue, showed a roughly 9 percent gain in housing starts.

Building permits seen as a sign of builders' confidence in the market, came in at an annual pace of 2.22 million in January, up 6.8 percent from December. Permits are much less affected by weather and seasonal adjustments than housing starts.

Much of the gain in the permits issued came from a 24 percent jump in multi-family home permits; single family home permits gained only 2.4 percent.

"There is some reassurance in that (single-family) permit number that the market is not exploding on the high side, and not collapsing," said the home builders' Seiders. "I still think we'll see them move down, but I expect it will be an orderly slowing from the unsustainable growth last year."

The January boom probably also got some help as mortgage rates edged lower. The average 30-year fixed rate mortgage rate was 6.15 percent last month, according to mortgage financing firm Freddie Mac, down from 6.27 percent in December and 6.33 percent in November.

But rates have started climbing again, and reaching 6.28 percent -- the highest in nearly two months -- in the most recent reading.

"Bernanke's confidence in a faster expansion after the U.S. economy grew 1.1 percent last quarter was borne out by reports published today. Builders broke ground last month on the most new houses in more than three decades..."

DC ranks 16 on a new list showing the extent of the housing bubble. According to the The Data Almanac 2006, it cost $499 more per month to buy a home than to rent a home in DC. In San Diego the difference was $1442. In New York, it was $1,118.

I can't stop thinking about the Beanie Baby bubble and its' similarities to the Housing Bubble.

"Those Beanie Babies will be worth MILLIONS one day"

Does anyone remember the large lineups at the local Hallmark on the morning of new shipments? The frenzied looks on people's faces when talking about collecting beanie babies? How many annoying people thought their retirements were resting in little fuzzy bags of styrofoam?

I wonder how many Beanie Babies were made before the Beanie Baby crash of 2000? (creepy because of the Jan 2006 housing starts) It seemed to me those things started appearing everywhere, and then the Ebay listings of all the "investors" looking to cash out skyrocketed, and then... POOF!millions of grandmas in financial ruin...

Rent your home. Be happy to rent. You are taking advantage of a temporary market distortion that allows renters to capture huge subsidies from landlord/owners. The downsides of renting -- no rehabs, no "pride of ownership" -- are hugely outweighed by the great economic benefits of renting. In many markets, renting is a fraction of the cost of buying a similar home. Spend some of this savings on yourself, and save the rest of it. When it all comes back into balance, you'll be able to buy cheap.

Oops, my comment was for the next-to-last anon. Last anon: I completely agree and that's what I'm doing now. I've seen my landlord's mortgage payment, and he's losing money even though he bought so many years ago. He's carrying all of the risk for the market fluctuation.

I told his wife that I sold my house to cash out. She told her husband that maybe they should do that too. I quickly said, "Don't take any investment advice from me," waving my hands. My motivation was that I wanted to rent this house.

What will the spring look like? Outside of this blog I continue to hear "buy now" before the spring when the market will pick up. I live in MA and prices remain high but houses are sitting longer. Does everyone "think" sellers will drop prices in the spring or summer? I have been renting for two years and after much reading I am still unsure what the "right time" will be.

I DO rent. Can't afford not to, plus at these prices, buying sounds crazy.

But it has sounded crazy for years, and prices still keep rising! None of this makes any sense to me, especially the part where payments so vastly exceed rents that residential RE can in no wise be considered an investment.

So why don't prices fall??? A plain old bubble should have collapsed already.

They say the economy is good, but I don't see it. Lots of McJobs available, but that's all. I just read where a new Wal-Mart got 25,000 applications for 350 jobs. Jesus! For a POS no-benefits employer like that! Does that sound like a good economy to you?

And still, real estate not only doesn't collapse, it hardly falls at all! And what little drop there is, could be temporary. Still too early to tell.

I'd feel a lot better if I understood what was happening. But this whole situation makes no sense to me.

I keep waiting to see the prices drop, but so far there is only a leveling off. We keep expecting the crash, but it will only appear as a crash when we look back 5 or 10 years from now.Reasons:

Sellers must keep their asking prices high. They way overpaid for their property in the first place.

Buyers are being victimized by lenders and realtors who cheer them on toward a purchase. Buyers have a wad of cash from creative lenders, and an agent who tells them they are getting a great deal by getting $20k below asking price on a property that has doubled in "value" in the last 5 years.

When these creative loans that have become all the rage recently start to bite back at the saps who bought them - then we will see the desperate sellers flood the market and prices crash back to earth. This won't happen until 2008,09,10. Until then the bubble will look like it is headed for a soft landing.

Patience, renters. It's a waiting game now. Might be this year, moire likely next year, and perhaps 08/09 -- might be a smooth downward glidepath, maybe a rout. No one can see into the future. But there's one thing that's clear -- the bubble has inflated to its max volume. In the meantime, find a home you like and KEEP RENTING. Be happy to rent, knowing you are collecting hundreds or thousands a month in subsidies from the owner, and keep your powder dry, i.e., keep/save cash in stable investments, because when the great buying opportuntiy arrives, cash will be king.

I just saw the DVD Our housing bubble is reflective of what happened to ENRON.

What has happened to real estate on the coasts is the responsibility of mortgage brokers, realtors, and speculators. In the end, Fannie Mae, Freddie Mack, and the federal regulators will be found responsible. Mortgage bonds sold on Wall Street will eventually be found to have been sold with culpable knowlege they were based on inflated home values. In the end, greed trumps everything.

Just like ENRON, the whole sheebang is going to come toppling down. The whole U.S. economy is going to implode eventually.

"I read the main blogs religiously; but I wonder whether we are simply reinforcing our own beliefs... sort of like the right wingers who read Ann Coulter, listen to Rush Limbaugh, and watch Fox News until they lose touch with reality."

Why the partisan smears to discuss real estate?

Here's some reality you may have lost touch with in your liberal bubble:

Oh, my. Having thought it through now, I can see that Ann Coulter, Rush Limbaugh, and Fox News are in fact voices of reason and balance, solicitous to those who disagree, thoughtful and balanced and not at all partisan, and whose audience are receptive and indeed eager to listen to opposing arguments.

Get real, fool. My analogy stands. The examples I gave -- not all conservatives, mind you -- are an excellent species of the political "bubble" mentality. People who only want to hear their own vehement opinions endless reiterated on TV, radio, and in books. Not so very different from the Islamic mullahs.

You may point out that the left fringe has the same types. This is true, but not, IMO, in the same degree or the same numbers. You don't hear a lot about "Left Wing Talk Radio" and CNN, no question about it, is more "fair and balanced" than Fox News.

I have been watching the DC metro market for about five years. Used to see condos for under 100K on realtor.com. Now there were 5 pages of a total 251 pages for Northern Virginia areas close in to DC showing properties for under $200K. These were typically condos in older buildings, probably higher condo fees too. On the first page there were a couple of rentals and on the fifth page the amount went over 200K. Have not seen any bubble burst here. Have seen the market a little bit sideways for more than six months. Back in 1998 there were two bedroom condos for sale for under $80,000. Inflation has been going up about 3.5%, what gives? Renting is alot cheaper than buying. In late 1998 there were townhouses in Manassas, a far suburb of DC for $99,000, brand new. I got an ad in the mail from the developer. The ads used to state that owning was cheaper than renting. They cannot honestly make that claim anymore by the time one figures interest, principle, down payment, finance fees, condo fees, property taxes, insurance costs and the possibility they might someday build faster than jobs growth in this area.

I have been watching the DC metro market for about five years. Used to see condos for under $100K on realtor.com. Now there were 5 pages of a total 251 pages for Northern Virginia areas close in to DC showing properties for under $200K, nothing under $100K. The cheap units were typically condos in older buildings, probably higher condo fees too. On the first page there were a couple of rentals and on the fifth page the amount went over 200K. Have not seen any bubble burst here. Have seen the market a little bit sideways for more than six months. Generally it is cheaper to rent that to own in this area.

To answer the questions about seasonal effects. It is not seasonal. Generally Jan and Feb are the months with the FEWEST listings. The Norther Virginia Association of Realtors (www.nvar.com) recently released the ACTIVE LISTINGS numbers for Jan 06. If we compare them to Jan 05 we show an increase of 392.54% for all listings.

"But there's one thing that's clear -- the bubble has inflated to its max volume."

I just want to say that ANONYMOUS is WAY behind the times. I think that max VOLUME (meaning money involved in transactions) peaked 6 or so months ago. Since sales are down 30% or so YOY, but the price is only up 10% YOY. It is also becoming more clear that prices maxed out in July. They have stagnated since then, but we will know what is going on come March to clear out the possible seasonal fluctuations. What we do know is that INVENTORY is UP in a huge way in any way you look at it.

Here is an article from a housing bull. Can you point out where his calculations are off? I sure can...

http://www.modbee.com/business/story/11843013p-12557207c.html

He starts out by saying home owners are 34 times as wealthy as renters. He says this means buying a home makes you wealthy. This silly noob has made a classic causation fallacy. The fact is, if you are poor home ownership is out of the question. If you are loaded, renting is out of the question. That is why the statistics are what they are.

His next mistake is to say that the monthly expenses of renting equal the monthly expenses of buying. He compares a $1500 rent with a $200,000 mortgage. Maybe that is true in Candyland where he lives, but where I live, renting will run you $1800 a month for a small home that you would need $700,000 to buy. The mortgage payments and tax payments would be at least triple the monthly rent depending on your mortgage. The tax break isn’t going to bridge that gap!

"I just want to say that ANONYMOUS is WAY behind the times. I think that max VOLUME (meaning money involved in transactions) peaked 6 or so months ago."

The bubble metaphor is about prices, values, not sales volumes. Prices are at an all time high; lower sales are a leading indicator of price declines. The bubble has, indeed, inflated to its max volume.

utah/ austin/ seattle,bainbridge island, s&s homes in socal still selling homes no problem and no drop in prices. Were years away from melt down if any. The prices will be flat maybe for years in my estimate. People on all the sites keep talking about rates going up but rates still have not moved much so tell the truth. Rates will have to get to 7.5 to 8 to have a real impact. The only thing that will cause real estate to crash is if china, japan , south korea etc stop buying our bonds but this wont happen no where else to put there money.

These are all legitimate words in the English language. Please learn the difference in their meanings and usage. If you are unsure, then please try to express yourself without attempting to use these words. When you misuse them, you simply exhibit your own ignorance and demonstrate that an education is not a requirement for purchasing a computer and posting to a blog. This is especially amusing when one who misuses these words is critical of the public schools. Fifth graders are able to learn these things. Anyone else who attended fifth grade should have, as well.

I'll second the last post. Yes, America is a blessedly egalitarian society and we don't ridicule those who haven't had the best educational opportunities. However, I've often been appalled at how the internet and blogging culture seems to treat English like the town whore instead of an elegant lady, as she deserves. Just a little effort in this direction will make your posts more persuasive.

english lauguage or not whats your point. There are plenty poor english teachers. Not everyone needs to or care to get the wording on this site correct. Lots of "A" students work for "c" students. That is why people in business hire other people. just answer the posts.

Those of you worried about a housing bubble, should be aware of the Syracuse Home Equity Protection scheme. A similar scheme is available for other areas. Take a look at www.livepropertyservices.com which covers most parts of the US.

If asset prices do not keep pace with inflation the price is depreciated by the shortfall. I.E. if I get a 3% raise this year and inflation is 5%, I've fallen behind by 2%, which is close to a 2% loss in spending power.

I've explained numerous times mathematically how a 10 year stagnation in prices (with 5% inflation) will reduce house prices by 40%.

Keep your fallacy alive that flat prices are nothing to be concerned about.

"english lauguage or not whats your point. There are plenty poor english teachers. Not everyone needs to or care to get the wording on this site correct. Lots of "A" students work for "c" students. That is why people in business hire other people. just answer the posts."

This was written with all the skill and command of English that might be expected from a fire hydrant. Maybe the problem with our schools is not with the current crop of students, but with the vast array of illiterate adults that have already been passed through the system. God, have mercy on the future of our once-great country.

Hey, no need to beat a dead horse here, but respect for the English language realy isn't about who works for who or who has the most swag. "I'm richer than you" is not an intelligent response to people who are trying to protect mother English from the grubby embrace of barbarians and dickheads. It's our language, all of ours, and for many of us who never learned another one, it's the only language we have. I don't care how much you make or what kind of car you drive -- you can try to show the old girl a little respect. If you got C's or dropped out or whatever, fine, that doesn't mean you are any less of a person. But you can make a little effort, at least.

It's what's wrong with this country; you have too many people wearing gold chains and designer suits and driving $80,000 cars and thinking that makes them hot shit. But if you're ignorant, tasteless, and live an unexamined life, those of us who respect the life of the mind are laughing at you. Not laughing so you'll see us -- laughing about you when you aren't around.

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